Al Qaeda affiliated Somali Islamist group Al-Shabab stormed the Maka Al-Mukarramah hotel on Friday, killing at least nine people and wounding dozens of others. Security forces attempted to gain control of the premises.
The militants exploded a car bomb in front of the hotel, which was followed by a suicide bomber blowing himself up - before attackers invaded the building with machine guns, killing and wounding guests as well as hotel employees.
Police say that around five to six people were involved in the attack and that the death toll is likely to rise.
Security forces claim to have killed several of the militants inside the hotel, but are still trying to gain control of the facility, where some militants are still holding out.
Another government official told AFP, however, that "all the attackers were killed and the situation is under control."
There are reports of desperate people jumping out of windows to escape.
The Maka Al-Mukarramah hotel was a popular rendezvous for Somali politicians, diplomats and government officials, apart from eminent members of civil society such as doctors and journalists.
Yusuf Mohamed Ismail Bari-Bari, Somalia's Permanent Representative to the UN office in Geneva, is reported to be among those who died in Friday's attack.
Another hotel guest who escaped with his life was Mohamed Mohamud Tifow, Somalia's ambassador to Germany.
Though they were driven out of their bases in the city in 2011, al-Shabab militants have continued to terrorize Mogadishu with suicide bombings, drive-by shootings and other attacks on a regular basis.
ac/bk (dpa, AP, AFP)